Under the terms of the Agreement, Antrim will receive a cash payment of CDN$10,262,356 (subject to adjustments) and 35,761,307 shares of Crown Point (the "Crown Point Arrangement Shares"). Based on the 20 day volume weighted average trading price of the Crown Point common shares on the TSXV on March 21, 2012, the total deemed consideration for the transaction is approximately CDN $53.75 million. Crown Point will fund the cash portion of the purchase price from its working capital.
As part of the Arrangement, the Crown Point Arrangement Shares will be distributed by Antrim to its shareholders on a pro rata basis by way of a reduction of stated capital. Following the completion of the Arrangement, Crown Point will have approximately 104.5 million shares outstanding, approximately 66% of which will be held by Crown Point's existing shareholders and approximately 34% of which will be held by Antrim's shareholders.
The Arrangement is expected to be highly accretive to Crown Point on a per share basis to operating income, reserves and production. The transaction has the following characteristics:
Antrim Argentina Daily Production (Q4 2011 (1) ) 1,550 BOED (2)
Total Proved 3,824 MBOE (4)
Proved Plus Probable 6,061 MBOE
Proved Plus Probable plus Possible(5) 7,204 MBOE
Net acres 279,822
Acquisition Metrics (6)
CDN$/average daily BOE(1) $29,935
CDN$/BOE Total Proved(3)(7) $12.13
CDN$/BOE Proved Plus Probable(3)(7) $7.66
CDN$/BOE Proved Plus Probable
plus Possible(3)(5)(7) $6.44
(1) Average daily production of Antrim Argentina for the quarter ended December 31, 2011, weighted approximately 20% to crude oil and natural gas liquids and approximately 80% to natural gas.
(2) "BOED" means barrels of oil equivalent per day.
(3) Reserves evaluated by McDaniel & Associates Consultants Ltd. ("McDaniel") as at December 31, 2011. Reserves are "gross reserves", being Antrim Argentina's working interest share of reserves before the deduction of royalties owned by others and without including royalty interests of Antrim Argentina.
(4) "MBOE" means thousand barrels of oil equivalent.
(5) Possible reserves are those additional reserves that are less certain to be recovered than probable reserves. There is a 10% probability that the quantities actually recovered will equal or exceed the sum of proved plus probable plus possible reserves.
(6) Prior to adjustment for the value of the undeveloped land being acquired.
(7) Excluding the future development capital estimated by McDaniel of $27.1 million for the proved plus probable reserves and $28.2 million for the proved plus probable plus possible reserves.
The acquisition of Antrim Argentina is expected to have the following benefits for Crown Point:
- Operatorship and increases working interest to 100% interest in the 307,000 acre Cerro Los Leones Neuquén Basin Exploration Concession with significant conventional and unconventional Vaca Muerta Shale Oil potential
- Increases corporate average daily production to over 2,000 BOED(1), giving the Company critical mass for continuing operations
- Near term seismic and drilling catalysts
- Provides entry into the natural gas weighted Tierra del Fuego portion of the Austral Basin in a time of rising Argentine natural gas prices
- Tierra del Fuego Austral Basin assets have near term 3-D seismically defined natural gas and oil upside
- Increases Total Proved Reserves 607%, from 630 MBOE to 4,454 MBOE(2)
- Increases Proved Plus Probable Reserves 353%, from 1,716 MBOE to 7,777 MBOE(2)
- Combined Reserve Reports Forecast Proved Producing Field Net Operating income for calendar 2012 increases 109% to USD$14.2 million
- Combined Reserve Reports Forecast Proved plus Probable Field Net Operating income for calendar 2012 (prior to capital expenditures) increases 58% to USD$24.5 million(2)
- Increases Argentina land holdings to 560,000 net acres
- Maintain strong balance sheet with current pro forma cash balance of approximately CDN $30 million.
(1) Based on Crown Point's average daily production and Antrim Argentina's average daily production for the calendar quarter ended December 31, 2011.
(2) Crown Point reserves evaluated by Gaffney, Cline and Associates Inc. as at August 31, 2011. Antrim Argentina reserves evaluated by McDaniel as at December 31, 2011. Reserves are "gross reserves", being each company's working interest share of reserves before the deduction of royalties owned by others and without including royalty interests of each company.
"This transaction will double our interest and deliver operatorship in our key exploration asset, Cerro Los Leones which has significant conventional oil and unconventional shale oil potential in the Vaca Muerta Shale. The production and reserve additions provide Crown Point with critical mass and move the corporation to the next level" said Murray McCartney, President and Chief Executive Officer of Crown Point. "The acquisition provides the company with an entry into a gas prone area in a rising natural gas price environment in Argentina. Both the Cerro Los Leones Concession and the Tierra del Fuego concessions provide near term drilling and production catalysts. Upon closing of the acquisition, Crown Point will retain a strong balance sheet and cash position to be used in the development of Crown Point's current assets and the assets acquired in this transaction. The successful completion of the transaction will allow Antrim's shareholders to participate in the exciting future growth of Crown Point."
Fairness Opinions, Recommendations and Support Agreements
The board of directors of Crown Point has unanimously approved the Arrangement Agreement and the Arrangement. Casimir Capital Ltd. is acting as sole financial advisor to Crown Point, and has provided the board of directors of Crown Point with its opinion that the consideration to be offered by Crown Point pursuant to the terms of the Arrangement Agreement is fair, from a financial point of view, to Crown Point shareholders.
Antrim's board of directors has unanimously determined that the Arrangement is in the best interests of Antrim and its shareholders, determined that the Arrangement is fair to Antrim's shareholders, approved the Arrangement and the Arrangement Agreement, and resolved to recommend that Antrim's shareholders vote in favour of the Arrangement.
All of the directors and officers of Antrim, together with certain significant shareholders of Antrim, who in aggregate hold approximately 27% of Antrim's issued and outstanding common shares, have entered into agreements with Crown Point to vote in favour of and otherwise support the Arrangement.
The Arrangement Agreement
Completion of the Arrangement, which is anticipated to occur in May 2012, is subject to, among other things, the approval of the holders of at least 66 2/3% of the Antrim common shares voting at a shareholder meeting to be held in May 2012, the receipt of all necessary court, regulatory and stock exchange approvals, the waiver or expiration of applicable rights of first refusal, and other customary closing conditions.
Crown Point has agreed to appoint Dr. Brian Moss, Antrim's Executive Vice President, Latin America and a member of Antrim's board of directors, to Crown Point's board of directors concurrent with the closing of the Arrangement.
Antrim has agreed not to solicit or initiate any discussion regarding the sale of Antrim Argentina or any other business combination or sale of material assets involving Antrim. Antrim has agreed to pay a termination fee of CDN$3.5 million to Crown Point in certain events, including if Antrim accepts, recommends, approves or enters into an agreement with respect to a superior proposal for the acquisition of Antrim. Crown Point and Antrim have also agreed to pay a termination fee of CDN$2.5 million to one another in certain other stated events. Antrim has agreed to pay a termination fee of CDN$1 million to Crown Point if the Antrim shareholders do not approve the Arrangement in order to reimburse Crown Point for its expenses.
An updated Crown Point corporate presentation will be posted on the Company's website at www.crownpointventures.ca.
About Crown Point
Crown Point Ventures Ltd. is an international oil and gas exploration and development Company headquartered in Calgary Canada, incorporated in Canada, trading on the TSX Venture Exchange (TSXV) and operating in South America. Crown Point's exploration and development activities are focused in the Golfo San Jorge and Neuquén basins in Argentina. Crown Point has a strategy that focuses on establishing a portfolio of producing properties, plus production enhancement and exploration opportunities to provide a basis for future growth.
Certain information regarding Crown Point set forth in this document, including all details regarding the proposed acquisition of Antrim Argentina and the Arrangement, our anticipation that the acquisition will be accretive, the benefits that we anticipate deriving from the acquisition, our anticipated average daily production, proved and proved plus probable reserves, net operating income for calendar 2012, our belief that the Tierra del Fuego Austral Basin has near term upside, our belief that the Cerro Los Leones Neuquen Basin Exploration Concession has significant potential, and the anticipated timing for closing the Arrangement, may constitute forward-looking statements under applicable securities laws. The forward-looking information is based on certain key expectations and assumptions made by Crown Point, including expectations and assumptions concerning: prevailing commodity prices and exchange rates; applicable royalty rates and tax laws; future well production rates and reserve volumes; the timing of receipt of regulatory and shareholder approvals; the performance of existing wells; the success obtained in drilling new wells; the sufficiency of budgeted capital expenditures in carrying out planned activities; and the availability and cost of labour and services. Although Crown Point believes that the expectations and assumptions on which such forward-looking information is based are reasonable, undue reliance should not be placed on the forward-looking information because Crown Point can give no assurances that they will prove to be correct.
Since forward-looking information addresses future events and conditions, by its very nature it involves inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These risks include, without limitation: risks associated with oil and gas exploration, development, exploitation, production, marketing and transportation, loss of markets, volatility of commodity prices, environmental risks, inability to obtain drilling rigs or other services, capital expenditure costs, including drilling, completion and facility costs, unexpected decline rates in wells, wells not performing as expected, delays resulting from labour unrest, delays resulting from our inability to obtain required regulatory approvals and ability to access sufficient capital from internal and external sources, the impact of general economic conditions in Canada, Argentina, the United States and overseas, industry conditions, changes in laws and regulations (including the adoption of new environmental laws and regulations) and changes in how they are interpreted and enforced, increased competition, the lack of availability of qualified personnel or management, fluctuations in foreign exchange or interest rates, and stock market volatility and market valuations of companies with respect to announced transactions and the final valuations thereof. There are also risks inherent in the nature of the proposed Arrangement, including failure to realize anticipated production, reserves and net operating income increases and anticipated cost savings and other synergies; risks regarding the integration of Antrim Argentina into Crown Point; incorrect assessment by Crown Point of the value of Antrim Argentina; and failure to obtain the required shareholder, court, regulatory and other third party approvals. Readers are cautioned that the foregoing list of factors is not exhaustive.
This press release also contains forward-looking information concerning the anticipated completion of the Arrangement and the anticipated timing thereof. Crown Point has provided these anticipated times in reliance on certain assumptions that it believes are reasonable, including assumptions as to the time required to prepare meeting materials for mailing, the timing of receipt of the necessary regulatory and court approvals and the satisfaction of and time necessary to satisfy the conditions to the closing of the Arrangement. These dates may change for a number of reasons, including unforeseen delays in preparing meeting materials, inability to secure necessary regulatory or court approvals in the time assumed or the need for additional time to satisfy the conditions to the completion of the Arrangement. In addition, there are no assurances the Arrangement will be completed. Accordingly, readers should not place undue reliance on the forward-looking information contained in this press release concerning these times.
Crown Point's actual results, performance or achievement could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurance can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what benefits that the Company will derive therefrom. Additional information on these and other factors that could affect Crown Point's operations and financial results are included in reports on file with Canadian securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com) or Crown Point's website (www.crownpointventures.ca). The forward-looking statements contained in this document are made as at the date of this news release and Crown Point does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws.
BOEs may be misleading, particularly if used in isolation
This press release shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of these securities in any state in which such offer, solicitation, or sale would be unlawful prior to registration or qualification under the securities laws of any such state.